Obama Focuses at UN on Mideast, Currency Friction With China

U.S. President Barack Obama speaks during the 65th annual United Nations General Assembly in New York. Photographer: Andrew Harrer/Bloomberg

Sept. 24 (Bloomberg) -- President Barack Obama used the
backdrop of the United Nations General Assembly meeting to
tackle tensions with China and to urge world leaders to support
the Middle East peace process, two issues that are testing his
economic and foreign policy plans.

The U.S. president pressed China’s Premier Wen Jiabao over
currency valuation during a two-hour meeting yesterday, an
adviser said, as momentum is building in Congress for trade
sanctions if the yuan remains what the U.S. views as
undervalued.

Earlier in the day, Obama told members of the UN they must
support Israel and the Palestinians as peace talks face a
critical test with the scheduled Sept. 26 expiration of Israel’s
10-month moratorium on settlement construction. Obama reiterated
his call for Israel to extend the moratorium as a way to build
trust and keep the process going.

“Now is the time for this opportunity to be seized, so
that it does not slip away,” Obama said in his address to the
General Assembly.

The president’s focus on currency and trade with China and
the U.S.-brokered Middle East peace talks underscores the
importance of both issues to Obama’s broader goals of
strengthening the economic recovery and addressing global
security. They also are taking prominence as U.S. voters are
looking toward November elections that will decide control of
Congress and Obama’s approval rating is stuck at less than 50
percent in most national polls.

U.S.-China Cooperation

In remarks to reporters before their meeting yesterday,
Obama and Wen papered over friction points. Obama called China
an “outstanding partner” and said its cooperation with the
U.S. was “absolutely critical” in dealing with the financial
crisis.

Wen said through a translator the common interests of the
U.S. and China “far outweigh” any differences. He also said he
wants to “foster favorable conditions” for a U.S. visit by
President Hu Jintao sometime next year, which administration
officials said may be as early as January 2011.

At a briefing afterward, Jeff Bader, Obama’s director of
Asian affairs, said China’s currency valuation was the “most
important issue” in the talks.

The yuan has appreciated about 2 percent against the dollar
since June 19, when the central bank said it would pursue a more
flexible exchange rate after keeping the currency at about 6.83
versus the U.S. currency for almost two years.

‘More Action’

“The president made clear that we’re expecting to see more
action, more significant movement” on China’s currency, Bader
said. Obama made clear “that he’s going to protect U.S.
economic interests and that we look for the Chinese to take
actions. If they don’t take actions, we have other means of
protecting U.S. interests.”

Chinese leaders are aware of the building momentum in the
U.S. Congress for action to restrict China’s imports over the
currency issue, Bader said.

“There was a lengthy discussion of the impact and the
politics of the issue,” he said.

House Democratic leaders say they are moving forward with
legislation intended to push China to raise the value of its
currency by allowing U.S. companies to petition for duties on
imports. Polls showing Democratic seats at risk heading into the
November elections may boost prospects for the bill.

“We’re seeing a learned response from the administration
on China, that they’ve got to take a firm line and say what they
mean,” said Ernest Bower, an analyst with the Center for
Strategic and International Studies in Washington, wrote in a
report.

Middle East

Obama devoted much of his address to the General Assembly
on the Middle East. He reiterated the U.S. commitment to
Israel’s security and urged Arab nations to match their pledges
of support for the peace process with deeds that will push it
forward, including “demonstrating the normalization” promised
to Israel.

“Peace must be made by Israelis and Palestinians, but each
of us has a responsibility to do our part as well,” Obama said.

Talks face a critical juncture this weekend as Israeli
Prime Minister Benjamin Netanyahu repeatedly has said he doesn’t
plan to extend the settlement construction freeze. Palestinian
Authority President Mahmoud Abbas said the talks, which began
earlier this month in Washington, can’t continue if construction
resumes.

Building Trust

“Now is the time for the parties to help each other
overcome this obstacle,” Obama said at the UN. “Now is the
time to build the trust -- and provide the time -- for
substantial progress to be made.”

Obama said those who count themselves as friends of the
Palestinians in the Arab world must seize the opportunity for a
peace agreement that will lead to a Palestinian state. They can
do that by supporting the Palestinian Authority financially and
politically and by coming to terms with Israel’s existence, he
said.

“Those who long to see an independent Palestine rise must
stop trying to tear Israel down,” Obama said.

He also pledged firm U.S. backing for Israel.

“After 60 years in the community of nations, Israel’s
existence must not be a subject for debate,” Obama said. “It
should be clear to all that efforts to chip away at Israel’s
legitimacy will only be met by the unshakeable opposition of the
United States.”

While Abbas was in attendance, Israel’s delegation wasn’t
present for the speech or the rest of the day’s sessions because
of the Jewish holiday of Sukkot, according to a statement from
the Israeli consulate. The U.S. was aware that the delegation
would be absent, the statement said.